South Africa is running out of power lines to transmit electricity from new projects and also needs an updated plan to keep running the auctions that are responsible for getting more supply from new large-scale clean-energy facilities, the head of the bid office said.

The country has had to sideline projects generating power from wind — a technology that provides more than 5% of South Africa’s electricity — because of a lack of grid connections in the last two bid windows of the state’s auction programme, Independent Power Producer Office head Bernard Magoro said.

As the country builds new power plants to end years of electricity outages that have hobbled the economy, it also needs to build and fund a R390-billion expansion of the national grid over the next decade so it can connect those facilities with factories, businesses and homes.

Grid connections are “becoming more scarce”, Magoro told a conference in Cape Town.

State-owned utility Eskom, which supplies more than 80% of South Africa’s electricity, is retiring more than 9GW of coal-fired units by 2030, and the 53GW of mainly clean-energy facilities opening in the next decade will require new lines.

Companies such as Enel Green Power are sitting out the seventh round of South Africa’s programme to source new energy projects until Eskom works out its grid-capacity issues.

“Bringing the private sector in is going to be important,” National Transmission Company South Africa chair Priscillah Mabelane told reporters. The government hived off NTCSA, which started trading in July, from Eskom, with the new entity owning and operating the country’s transmission system.

Streamlined

“We do recognise that we have challenges due to the lack of investment” in the grid, she said.

Frequent power cuts, rampant corruption, erratic lawmaking and hostile relations between business and the state deterred investment in South Africa, whose economic growth has averaged less than 1% over the past decade, outpaced by population growth.

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Reforms recently stabilised supply at Eskom, which has avoided power cuts for six months, but South Africa needs a long-term strategy and streamlined processes for the clean-energy auctions “to keep the programme relevant”, Magoro said. — (c) 2024 Bloomberg LP